In the past few months I've read several posts about manipulation of MLS data; heck I've even written a couple. Yesterday I read a post by Suzi Gravenstuk of Long Beach, Mississippi "I was going to be Sugar and Spice..." It made me think of the numerous conversations I've had with our local Board (and others) about the data manipulation I see occurring on an almost daily basis. A couple of years ago the Greater Fairbanks Board of REALTROS overturned a ruling by a previous BoD that said if you have a listing and it expires or is withdrawn you must wait 90 days before putting it back into the MLS IF you want to reset the DOM clock. The only exception was if the property was listed by another agent, then the DOM clock would reset regardless of how little time has passed.
As expected some Fairbanks agents sill found ways to manipulate the data; many simply joined forces and co-listed a property, with the new agent being primary. This of course reset the DOM clock. It was claimed sellers were outraged because listing agents couldn't reset the DOM clock and were pulling their listings in droves and relisting them with a new agent to get a fresh start; a dubious claim at best. Under the guise of 'equality' a vocal minority pressured the MLS committee and BoD to approve a change that would allow listing agents to input a listing as new anytime a listing expired; effectively removing the 90 day rule.
The unintended by-product was that agents are now free to withdraw a property from the MLS and relist it at any time and reset the clock. If a property expires after 90 days, is listed and expires after 90 more, is listed and sold the third time (they say the third time is the charm) after 27 days, the reported DOM is 27 when, in my opinion, it should be 207. Only the last listing is used to calculate the DOM for reporting purposes. This makes the reported DOM stats much, much less accurate. Granted this information can be found with a little digging, but it's not accessible by consumers, and worse, some agents only tell half the story; "It's been on the market 27 days... (this time)"
Imagine that same property is listed for $450,000 and doesn't sell during the initial listing period and is reduced to $400,000 during the second listing period. Again, no takers. During the third listing the sellers begin to find reality and drop the price to $345,000. 27 days later the property sells for $335,000. What's the list to sales price ratio? 91.1% or 74.5%? As you can probably imagine I'm of the opinion that it's the latter. Our Board disagrees. "The list to sales price ratio is based off the last listed price." Huh? I just don't see that logic.
Recently our AE put out a short market report which included basic stats about average sold prices, average days on the market and listing activity for January 2008. What I found most interesting is how WRONG these stats were. For example, the reported days on the market for Fairbanks was 92. Factoring in homes that have been listed, expired/withdrawn and relisted shows the true days on the market to be 168... a difference of more than 82%. According to our Board the reported list price to sales price ratio was 97%. The true list price to sales price ratio, however, is 89.5%. The average price of a home in Fairbanks, Alaska is $223,000. The current reported stats would seem to indicate the home will sell in 92 days for 97% of the list price, or $216,310. The truth is the home will likely sell for 89.5% of list, or $199,585, and it will take just shy of 6 months to do it. That's a difference of almost $17,000 and twice the marketing time.
Now, you may be thinking "What the heck is his problem? Why does it even matter?" Well, I'll tell you why. It matters because if we can't rely on the integrity of the MLS data how in the world are we supposed to provide accurate information to our buyers and sellers. If I'm trying to research comps and I use the $450,000 example above, I could potentially be way off the mark in setting value if I operated under the assumption that the house sold for $10,000 under asking price in just 27 days. We could move a lot of inventory off the market by hitting the correct price point. It's hard to do that with skewed statistics.
It would seem to me, and please tell me if I'm crazy, that we would all be better served to address the underlying reasons why a house isn't selling. Chances are it's not because the DOM clock is tick, tick, ticking away. It might have more to do with the dead cat smell, the warthogs that occupy the property OR the fact that the property is 34% over market value. Price is the cause; DOM is simply the effect. Fix the cause and the house will sell. Ignore the cause and no amount of data manipulation will do any good. Are we really serving our clients best interest by NOT addressing the root cause? Is this ethical conduct?
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